Annual Allowance for Pensions

The Standard Annual Allowance

The annual allowance for 2025/26 is £60,000. This is the total amount that can be paid into all your pension schemes in a tax year (including employer contributions) and still receive tax relief.^[1]

What Counts Towards the Limit?

The annual allowance covers:^[1]

Your own pension contributions
Employer contributions
Tax relief added by your provider
Contributions to all schemes combined (workplace, personal, SIPP)

Tapered Annual Allowance

If you’re a high earner, your annual allowance may be reduced:^[2]

The taper applies if your threshold income exceeds £200,000 and your adjusted income exceeds £260,000
For every £2 of adjusted income over £260,000, your allowance is reduced by £1
The minimum tapered allowance is £10,000

Threshold income is broadly your taxable income minus your own pension contributions. Adjusted income adds employer contributions back in.

Money Purchase Annual Allowance (MPAA)

If you’ve started flexibly accessing a defined contribution pension (e.g. taking taxable income from drawdown), your annual allowance for money purchase pensions drops to £10,000.^[3]

This doesn’t apply if you’ve only taken your tax-free lump sum or bought an annuity.

Carry Forward

If you didn’t use your full annual allowance in the previous 3 tax years, you can carry the unused amount forward. This lets you contribute more than £60,000 in a single year without a charge.^[4]

To use carry forward, you must have been a member of a pension scheme in the years you’re carrying forward from (even if you contributed nothing).

The Annual Allowance Charge

If total contributions exceed your available annual allowance, you pay an annual allowance charge on the excess. The charge is at your marginal Income Tax rate. Report it on your Self Assessment return.^[5] You can file your Self Assessment online with HMRC-recognised software such as GoFile.

If the charge exceeds £2,000, you may be able to ask your pension scheme to pay it from your pension pot (called “scheme pays”).

Frequently Asked Questions

What is the pension annual allowance for 2025/26?

The standard annual allowance is £60,000 for the 2025/26 tax year. This is the maximum total that can be contributed to all your pension schemes (including employer contributions) while still receiving tax relief.

What happens if I exceed the pension annual allowance?

You will pay an annual allowance charge on the excess at your marginal Income Tax rate. You must report this on your Self Assessment return. If the charge exceeds £2,000, you may be able to ask your pension scheme to pay it from your pot.

Can I carry forward unused pension allowance?

Yes. You can carry forward unused annual allowance from the previous three tax years, allowing you to contribute more than £60,000 in a single year. You must have been a member of a pension scheme in the years you are carrying forward from.

What is the tapered annual allowance for high earners?

If your threshold income exceeds £200,000 and your adjusted income exceeds £260,000, your annual allowance is reduced by £1 for every £2 over £260,000. The minimum tapered allowance is £10,000.

Sources

Annual allowance — GOV.UK
Tapered annual allowance — GOV.UK
Money purchase annual allowance — GOV.UK
Carry forward — GOV.UK
Self Assessment tax returns — GOV.UK